In May 2026, the Ministry of Corporate Affairs (MCA) issued a compliance circular tightening governance and financial disclosure requirements for Special Purpose Vehicles (SPVs) used in infrastructure projects. The circular applies to all newly incorporated SPVs and existing entities with assets exceeding Rs 50 crore, effective immediately.
For infrastructure developers, contractors and equity investors, this marks a material shift in how project entities must report related-party transactions, board composition and project milestones. Non-compliance carries reputational and audit friction; timely restructuring avoids downstream delays in project financing and regulatory approvals.
Market signals
SPVs must now disclose all transactions with sponsors, lenders and affiliates in quarterly board minutes and annual reports. Arms-length certifications from independent auditors are mandatory for deals above Rs 10 crore.
Infrastructure SPVs must appoint at least one independent director if project value exceeds Rs 100 crore. Board audit committees must meet quarterly and report to MCA-registered compliance officers.
SPVs cannot declare or distribute surplus until certified milestones (land acquisition, environmental clearance, financial closure) are formally recorded and attested in board resolutions.
The MCA circular operationalises provisions under the Companies Act, 2013 Schedules IV and V. Infrastructure SPVs with existing governance gaps face audit qualifications and potential lender pushback during refinancing rounds. Vinayakam Consultants helps sponsors and project managers audit current SPV bylaws, board composition and disclosure templates against the May 2026 requirements, and restructure related-party arrangements to satisfy arms-length pricing and documentation standards before auditors flag gaps during statutory review.
Your action checklist
- Review your SPV's Memorandum and Articles of Association (MOA/AOA) against the May 2026 MCA circular; confirm independent director appointments and audit committee terms are formally recorded.
- Conduct a related-party transaction audit: list all contracts with sponsors, lenders, affiliates and sister companies; obtain arms-length certifications from independent valuers or auditors for transactions over Rs 10 crore.
- Establish a project milestone register: document land acquisition, environmental clearance, financial closure and other material events with board attestation; link dividend/distribution approvals to certified milestone completion.
- Schedule a quarterly board governance review: ensure audit committee meets within prescribed timelines, board minutes capture related-party disclosures, and compliance certifications are filed with the SPV's registered company secretary.
Frequently asked questions
The May 2026 MCA circular mandates enhanced transparency for related-party transactions, independent director appointments for projects exceeding Rs 100 crore, and quarterly board audit committee meetings with mandatory MCA compliance officer reporting.
All newly incorporated SPVs and existing entities with assets exceeding Rs 50 crore must comply immediately with the enhanced governance and financial disclosure requirements.
Non-compliance carries audit qualifications, reputational damage, lender pushback during refinancing, and potential delays in project financing and regulatory approvals.